Advertising costs rising with mortgage competition

The price of acquiring new customers through online platforms such as Google, SEO or social media channels is becoming increasingly expensive as demand for mortgages heats up.

The latest Australian Bureau of Statistics’ (ABS) lending indicators data for January 2021 shows that Australia continues to report record-breaking mortgage activity. New loan commitments (seasonally adjusted) rose by 10.5 per cent in January 2021, to $28.8 billion, with new owner-occupier loans breaking the $22-billion mark for the first time.

Given the competition in the market for mortgages, keyword/pay-per-click advertising (placing adverts online when certain keywords are searched for) has been rising for high-volume, high-competition keywords such as “mortgage broker” and “home loan rate”.

For example, the cost per click for “mortgage broker” sat around $4 two years ago, but now can be between $10-$20 (depending on geographic location etc) on Google Ads.

Noting the rising cost of keyword advertising, the head of mortgage channel at marketing automation platform ActivePipe, Paul Smith, told The Adviser that the cost of acquiring new customers through the media is one of “the biggest threat brokers are facing”.

According to Mr Smith, it can be very hard for individual brokers to afford to advertise on these keyword terms.

However, he added that as the vast majority of broker clients are from word-of-mouth referrals, email marketing to existing clients remained one of the most cost-effective methods of acquiring new business.

“With all the complexity around getting noticed on social media or even your website, email remains the easiest, cheapest and most effective way to speak to the contacts in your database who trust and know you.” 

Research conducted by ActivePipe last year found that borrowers who received regular calls or emails from their broker were more likely to use the same broker in future. 

Moreover, borrower clients who receive regular calls from their mortgage broker were found to have the highest level of trust with their broker, were less likely to open rate-based emails from rival brokers or lenders, and were more likely to show rival offers to their broker.

Unsurprisingly, borrowers who didn’t hear from their broker after settlement, even the ones who had an outstanding experience, said they would be open to shopping around for their next loan. 

Mr Smith noted that more brokers were embracing email marketing offerings, such as those offered by ActivePipe (which he said had recently onboarded its 1,100 broker), to stay front of mind with new clients and improve their chances of being referred on.

However, Mr Smith added that email marketing was only successful if the content was interesting, relevant and helpful. 

“Long gone are the days when sending promotions or RBA rate updates to your database was enough,” he said. 

“People want and expect value-driven content. But also laid out in a way that matches how short of an attention span people have online.”

According to ActivePipe’s research, 95 per cent of broker customers said they would enjoy getting a monthly email from their broker with lots of images and short copy – and suggested that it would help them remember their broker and feel connected to them.

Mr Smith said the company would continue to invest in research and technology to help brokers make the most of their email marketing in near future, stating: “We’re running more research products, investing in new features and finding more ways to help brokers communicate to all the different leads, applications and clients in their database.”  

You can find out more about how brokers market their presence online in The Adviser’s Elite Broker podcast and keep an eye out for next month’s edition of The Adviser magazine, which includes a feature on digital marketing, too.

[Related: Research reveals how broker customers react to marketing]

Written by Annie Kane

Last Updated: 09 March 2022

Published: 09 March 2021